1. Charger Company's most recent balance sheet reports total assets of $29,375,000, total liabilities of $16,875,000 and total equity of $12,500,000. The debt to equity ratio for the period is (rounded to two decimals):

0.57

1.74

0.43

0.74

1.35

2.On January 1 of Year 1, Congo Express Airways issued $3,675,000 of 7%, bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,280,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized using the straight-line method at a rate of $20,000 every 6 months. The life of these bonds is:

18 years.

9.9 years.

20 years.

16 years

7 years.

3.A company issued 5-year, 9% bonds with a par value of $107,000. The company received $104,947 for the bonds. Using the straight-line method, the amount of interest expense for the first semiannual interest period is:

$4,815.00.

$10,040.60.

$4,609.70.

$9,630.00.

$5,020.30.

4.A company issued 9%, 5-year bonds with a par value of $90,000. The market rate when the bonds were issued was 8%. The company received $93,653 cash for the bonds. Using the effective interest method, the amount of interest expense for the first semiannual interest period is:

$7,492.24.

$3,746.12.

$4,050.00.

$8,100.00.

$3,600.00.

5.A company has bonds outstanding with a par value of $90,000. The unamortized premium on these bonds is $2,025. If the company retired these bonds at a call price of 97, the gain or loss on this retirement is:

$2,025 gain.

$4,725 gain.

$2,700 loss.

$2,025 loss.

$2,700 gain.

6.On July 1, Shady Creek Resort borrowed $300,000 cash by signing a 14-year, 10.5% installment note requiring equal payments each June 30 of $49,877. What amount of interest expense will be included in the first annual payment?

$21,429

$281,623

$49,877

$18,377

$31,500

7.On January 1, a company issues bonds dated January 1 with a par value of $280,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $291,365. The journal entry to record the issuance of the bond is:

Debit Bonds Payable $280,000; debit Bond Interest Expense $11,365; credit Cash $291,365.

Debit Cash $291,365; credit Premium on Bonds Payable $11,365; credit Bonds Payable $280,000.

Debit Cash $291,365; credit Discount on Bonds Payable $11,365; credit Bonds Payable $280,000.

Debit Cash $291,365; credit Bonds Payable $291,365.

Debit Cash $280,000; debit Premium on Bonds Payable $11,365; credit Bonds Payable $291,365.

8.Marwick Corporation issues 16%, 5 year bonds with a par value of $1,080,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 14%. What is the bond's issue (selling) price, assuming the Present Value of $1 factor for 7.0% and 10 semi-annual periods is 0.5083 and the Present Value of an Annuity factor for the same rate and period is 7.0236?

$1,080,000

$869,244

$1,686,839

$1,155,803

$473,161

9.On January 1, a company issues bonds dated January 1 with a par value of $470,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 12% and the bonds are sold for $452,707. The journal entry to record the first interest payment using straight-line amortization is:

Debit Interest Expense $27,579.30; credit Premium on Bonds Payable $1,729.30; credit Cash $25,850.00.

Debit Interest Payable $25,850.00; credit Cash $25,850.00.

Debit Interest Expense $27,579.30; credit Discount on Bonds Payable $1,729.30; credit Cash $25,850.00.

Debit Interest Expense $24,120.70; debit Discount on Bonds Payable $1,729.30; credit Cash $25,850.00.

Debit Interest Expense $25,850.00; credit Cash $25,850.00.

10.On January 1, a company issues bonds dated January 1 with a par value of $320,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $307,034. The journal entry to record the first interest payment using the effective interest method of amortization is:

Debit Interest Payable $11,200.00; credit Cash $11,200.00.

Debit Interest Expense $10,118.64; debit Discount on Bonds Payable $1,081.36; credit Cash $11,200.00.

Debit Interest Expense $12,281.36; credit Premium on Bonds Payable $1,081.36; credit Cash $11,200.00.

Debit Interest Expense $12,281.36; credit Discount on Bonds Payable $1,081.36; credit Cash $11,200.00.

Debit Interest Expense $10,118.64; debit Premium on Bonds Payable $1,081.36; credit Cash $11,200.00.